Administrators of Signature Living's Shankly Hotel have said they will investigate how investor money was spent – but that there will be no "fire sale" of one of Liverpool's most well-known hotels.
The ECHO revealed last week that Duff & Phelps was appointed as administrators of Signature Shankly Ltd, and the business has today said part of its role will be to look into how funds were spent by Lawrence Kenwright's firm prior to the appointment on April 9.
It comes after fellow firm Quantuma, which is advising investors through the administration process, claimed on Friday that "over £10m" of Signature Shankly Ltd money may have been lent to other companies in the group.
Mike Lennon, of global advisory firm Duff & Phelps, and one of the joint administrators, said: “We are aware that a number of the bedroom investors have become concerned in recent months that monies due to them have not been paid despite assurances from the company.
"The company is part of a wider group of companies and understanding how funds flow around the group will be central to our investigations.
"We have written to all known investors and will continue to communicate with them as the impact of our appointment on their position becomes clearer.”
Last week, the ECHO reported how the administration news had created more worries for investors in the hotel – who were already struggling to get repayments on money they had put into it. One of those said the investment represented her "life savings", and that she felt like "everything I've worked towards has been snatched away".
The joint administrators also confirmed on Tuesday there will be no "fire sale" of the Victoria Street venue.
Mr Lennon said: “The hotel itself is a quality venue and working with the lenders and investors we will be carefully considering our strategy to ensure that we get the best outcome for those that are owed money.
"All options are under consideration to recover value for the creditors."
When appointed last week, Mr Lennon, along with joint administrator Matthew Ingram, said the wider Signature Living group remains unaffected.
They also stated that they expect the hotel to open again for business when lockdown restrictions are lifted, with new enquiries still being accepted.
On Tuesday, Henslow Trading, a lender to the group, confirmed its support for the administrators' strategy.
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A spokesman said: “The concept of the hotel and others within the group is unique and we believe that this will, ultimately, deliver value for creditors.
"We have supported certain assets in the group with a sensible level of lending against those developments, but more recently have become concerned that hotel closures and construction slow downs as a result of Covid-19, combined with increasing creditor enforcement actions, indicated all was not well financially.
"Despite our continued financial support on key developments, legal proceedings that had commenced against the company resulted in the administration being unavoidable.”
The spokesman also said the firm understood an application had been made by a creditor to appoint an administrator from a "different firm" – Quantuma.
The Henslow Trading spokesman confirmed that it had stepped in to take control of the process "as they are legally entitled to do".
A spokesman for the firm: “This is a complex situation, with considerable sums of money involved across many connected legal entities.
"We remain highly confident that handled appropriately, there will be equity in assets and the completion of sites under development will benefit creditors through enhanced realisations.
"We will support this process, but it is important that the firm handling the administration is independent, reputable and able to demonstrate the depth, experience and skill base to investigate these issues, as well as protecting the assets for the benefit of all creditors.”
Last week, Quantuma said that with Duff & Phelps now chosen, it will instead advise investors throughout the administration process.
Simon Bonney, partner at Quantuma, alleged that millions of pounds’ worth of money invested into the hotel “has been lent to other group companies”, adding that the news will have “serious consequences”.
He said: “These are very concerning events for investors.
“The company and the wider Signature group have been subject to winding up petitions and the administration of Signature Shankly is going to have serious consequences, not least because over £10m of the company’s money seems to have been lent to other group companies according to the last filed accounts.
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“Those funds will have to be repaid.”
A full statement from Signature Living following the announcement of administration on Friday said: "Due to Covid-19 and government guidelines the Shankly Hotel ceased trading with immediate effect. We have been left with no option but to place the property subsidiary of the hotel into administration. The operational trading company for the Shankly Hotel remains unaffected as does the wider Signature Living group.
"We are all facing unprecedented times and the impact of this pandemic on our business has forced us to make some immediate and difficult decisions. The operating company remains completely unaffected. It will be business as usual for the Shankly Hotel as we are fully committed to our staff, suppliers, future events and guests. We look forward to opening our doors as soon as it’s safe to do so."